Amy Worden

Inquirer Staff Writer

Pennsylvania Attorney General Kathleen Kane rejected the Corbett administration's contract with a British firm to manage the $3.5 billion Pennsylvania Lottery, saying it "contravenes the Pennsylvania constitution."

Kane, speaking at a press conference, said among other things the contract "usurps the power of the Gaming Control Board's to regulate expanded gaming."

"We review approximately 5,000 contracts a year, and while most are approved, we not rubber stamp any one of them," Kane said, as cameras clicked away as she read her statement.

"We reviewed this contract with great care and with a focus on the law," the attorney general said of the lottery privatization agreement. "The proposed contract contravenes the Pennsylvania constitution and is not statutorily authorized."

Kane did not take any questions during her brief press conference.

Gov. Corbett issued a statement late Thursday saying he was "deeply disappointed' in Kane's action.

"I don't agree with the attorney general’s analysis and decision, and we will review our legal options," said Corbett.

Camelot Global Services' bid to take over lottery management from state employees expired Saturday.

The rejection by Kane, a Democrat who took office last month, represents the first parry in what is likely to be a tense relationship with the Republican governor.

Corbett had called the attorney general's role a routine contract review and had pressed to make her decision on the form and legality of the 20- to 30-year contract designed to increase funding for senior services.

Corbett formally announced last month that he would award Camelot the contract in exchange for $34 billion in profits over 20 years. The larger revenue was built on the presumption of expanded gaming, including keno and online gaming. Last week in his budget address Corbett said he would include an additional $50 million for senior programs if the contract, for which Camelot was the sole bidder, was approved.

For its part, Camelot on Thursday said it was disappointed with Kane's decision.

"We guarantee our proposal will produce unprecedented profits for senior programs and we have backed our investment in Pennsylvania with $200 million – transferring all risk from state taxpayers," the company said in a statement. "Camelot has indicated it would headquarter in Pennsylvania, pay all taxes required of any commonwealth business, and keep all lottery jobs in the state. We have also publicly stated we would not oppose union organization by our employees.”

Senate and House Democrats, on the other hand, were elated by the news, calling the contract "ill-conceived and illegal."

House Democrats even raised the ante by announcing legislation to provide an additional $120 million in additional funding for senior programs.

Both Democratic lawmakers and AFSCME, the union that represents 170 lottery employees, are challenging the legality of the deal in court. Republican lawmakers also have questioned the speed and lack of transparency involved with the deal.

Since the founding of the lottery 43 years ago, proceeds have been dedicated to supporting senior programs, including prescriptions drugs and transportation.